Act 035 of 2010 : Essential Commodities (Amendment) Act, 2010

SOR Statement of Objects and Reasons

Prefatory Note-Statement of Objects and Reasons.-The Essential Commodities Act, 1955 seeks to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities. Sugar and sugarcane are foodstuffs and thus essential commodities under the said Act. Under the system of partial control on sugar, a part of the sugar produced by sugar mills is requisitioned as levy sugar and the balance is allowed to be sold as non-levy (free sale) sugar in the open market. While the price of non-levy sugar is determined by the market forces, the price of levy sugar is fixed by the Central Government under the provisions of sub-section (3-C) of Section 3 of the aforesaid Act, having regard to-

(a) the fair and remunerative price, if any, fixed for sugarcane by the Central Government;

(b) the manufacturing cost of sugar;

(c) the duty or tax, if any, paid or payable thereon; and

(d) the securing of a reasonable return on the capital employed in the business of manufacturing of sugar.

2. Sub-section (3-C) of Section 3 of the Essential Commodities Act, 1955 was last amended by clause (a) of Section 2 of the Essential Commodities (Amendment and Validation) Act, 2009, inter alia, inserting therein the following Explanation II with effect from the 1st day of October, 1974 to clarify beyond doubt that the cost components of levy sugar mentioned in the said sub-section (3-C) do not include the additional price of sugarcane paid or payable under the erstwhile Clause 5-A of the Sugarcane (Control) Order, 1966 and the price paid or payable under any order or enactment of any State Government and any price agreed to between the producer and the grower of sugarcane or a sugarcane growers' co-operative society-

‘Explanation II.-For the removal of doubts, it is hereby declared that the expressions "minimum price" referred to in clause (a), "manufacturing cost of sugar" referred to in clause (b) and "reasonable return on the capital employed" referred to in clause (d) exclude the additional price of sugarcane paid or payable under Clause 5-A of the Sugarcane (Control) Order, 1966 and any price paid or payable under any order or enactment of any State Government and any price agreed to between the producer and the grower of sugarcane or a sugarcane growers’ co-operative society.'.

3. The said Explanation II, however, remained effective till the 30th September, 2009 only as the said sub-section (3-C) of Section 3, was substituted by a new sub-section (3-C) on and from the 1st day of October, 2009 vide clause (b) of Section 2 of the aforesaid Amendment Act of 2009. Since the newly substituted sub-section (3-C) does not contain any Explanation on the lines of the said Explanation II, it is likely that it may lead to a possible interpretation that the intention of the legislature has been not to exclude, with effect from the 1st day of October, 2009, the consideration of any price paid or payable by the producer of sugar under any order or enactment of any State Government and any price agreed to between the producer and the grower of sugarcane or a sugarcane growers' co-operative society. Such an interpretation is again likely to lead to ambiguity and further litigation, which in fact, the Essential Commodities (Amendment and Validation) Act, 2009 was intended to remove. The objective of the amendment is to extend the application of Explanation II [inserted under sub-section (3-C) by clause (a) of Section 2 of the Amendment Act 36 of 2009] beyond the 30th September, 2009 as well.

4. In view of the above, it is proposed to amend sub-section (3-C) of Section 3 of the Essential Commodities Act, 1955, by inserting therein an Explanation with retrospective effect that is with effect from the 1st day of October, 2009 so as to clarify the intention of the legislature beyond doubt.

5. The Bill seeks to achieve the above objects.